This free online interest calculator compares simple interest and compound interest side by side so you can see how your money grows under each method. Enter the principal, annual rate, time period, and compounding frequency to get instant results.
How to Use the Interest Calculator
Enter the "Principal Amount (₹)" you're investing or borrowing.
Enter the "Annual Rate (%)" of interest.
Enter the "Time (years)" for which the money is invested or borrowed.
Select a "Compounding Frequency" (Annually, Semi-Annually, Quarterly, or Monthly).
Click "Calculate Interest" to compare simple and compound interest results side by side.
Simple and Compound Interest Formulas
The calculator works out both types of interest from the same inputs so you can see how much compounding adds.
Simple interest: SI = P × R × T ÷ 100. Interest is earned only on the original principal, so it grows by the same amount every year.
Compound interest: A = P × (1 + r ÷ n)^(n × t), and CI = A − P. Here r is the rate as a decimal (8% = 0.08), n is the number of compounding periods per year and t is the time in years.
You can enter fractional years. For 18 months, type 1.5.
Worked Example
Say you put ₹1,00,000 at 8% a year for 5 years. Simple interest is 1,00,000 × 8 × 5 ÷ 100 = ₹40,000, giving ₹1,40,000 at the end. With quarterly compounding, the amount is 1,00,000 × (1 + 0.08 ÷ 4)^20 = 1,00,000 × 1.02^20 ≈ ₹1,48,594.74, so the interest is about ₹48,595. Compounding has earned roughly ₹8,600 more over the same five years.
The gap widens with time. Interest earned on ₹1,00,000 at 8%:
Years
Simple
Compound yearly
Compound quarterly
Compound monthly
1
₹8,000
₹8,000
₹8,243
₹8,300
3
₹24,000
₹25,971
₹26,824
₹27,024
5
₹40,000
₹46,933
₹48,595
₹48,985
10
₹80,000
₹1,15,893
₹1,20,804
₹1,21,964
20
₹1,60,000
₹3,66,096
₹3,87,544
₹3,92,680
Two things stand out. Over one year with yearly compounding, simple and compound interest are identical. And while moving from yearly to quarterly compounding makes a visible difference, going from quarterly to monthly adds comparatively little.
Which Type Applies Where in India
Bank fixed deposits: most banks compound FD interest quarterly. For short deposits of under six months, or when interest is paid out monthly or quarterly instead of reinvested, the effect is closer to simple interest.
Savings accounts: interest is calculated on the daily balance and credited periodically, usually every quarter.
Informal loans: loans between friends, relatives or local moneylenders are often quoted as simple interest per month, for example "1 rupee per hundred per month". That is 1% a month, or 12% a year, on the original amount.
Bank loans: home, car and personal loans charge interest on the reducing balance through EMIs. Use the EMI Calculator for those rather than this tool.
Comparing Rates Fairly
Two deposits with the same headline rate can earn different amounts if they compound at different frequencies. The effective annual rate shows what you really earn in a year: 8% compounded quarterly works out to about 8.24% a year, and 8% compounded monthly to about 8.30%. When comparing offers, look at the effective rate or the maturity amount rather than the stated rate alone.
A handy shortcut for compound interest is the rule of 72: divide 72 by the annual rate to estimate how many years money takes to double. At 8% it takes about 9 years, and at 6% about 12 years. With simple interest at 8%, doubling takes a full 12.5 years.
Interest from deposits is taxable as income in India at your slab rate, and banks may deduct TDS. The figures here are before tax.
Frequently Asked Questions
Simple interest is calculated as SI = (P × R × T) / 100, applied only to the original principal. Compound interest uses Amount = P × (1 + r/n)^(n × t), where the interest earned in each period is added back to the principal before the next period's interest is calculated, so it grows faster over time.
The compounding frequency (n) determines how many times per year interest is calculated and added to the principal. Choosing Monthly (n=12) compounds interest more often than Annually (n=1), which results in a slightly higher total amount for the same rate and time period.
They are equal for a period of exactly one compounding interval, such as one year with annual compounding. After that, compound interest is always higher because interest starts earning interest.
For simple interest, multiply by 12: 1.5% a month is 18% a year. If the monthly interest is compounded, the effective annual rate is higher. At 1.5% a month compounded monthly it is about 19.6% a year.
Before tax. Interest on fixed deposits and savings accounts is added to your income and taxed at your slab rate, so your actual return after tax will be lower.